RAK Rakon

[scamper]

wow, kj
you mean you've made 25% in the last month and are brave as well?!
This share has been a long-term disappointment for me, and i can't seem to think past small trades to minimise the overall loss...
Cheers to the brave!

[KJ]

wow, kj
you mean you've made 25% in the last month and are brave as well?!
This share has been a long-term disappointment for me, and i can't seem to think past small trades to minimise the overall loss...
Cheers to the brave!

No Scamper-I paid $1.07 so not much gain for me.Feel it should do OK over the next year or 2.Time will tell.

[ratkin]

Once again the stock has bounced off the upper trendline , looked as if it as going to smash through , however didnt follow through with the move.


Attachment 3361

[biology12]

Hey guys,

first comment, been following rakon a bit, ive got a few g to through around. thinking of jumping in before the profit release next week?
i like rakon, and it seems they are doing really well with all the awards they have won. any thoughts on movements would be great.

graham

[Catalyst]

Hi Graham

Here are my 2 cents...

We're obviously interested in 1) what the FY11 profit will be; and 2) profit guidance for FY12.

1. The company said in Nov 2010 that they are comfortable with broker analyst consensus of FY11 EBITDA between $25-$30m. That was when the NZD/USD was about 76c and it probably averaged that for the remainder of the FY. Here are my rough calculations...

EBITDA = $30.0m (lets take the top of that range)
- D&A = $13.0m (double the half year figures, including share-based payments, plus a bit)
- I&T = $ 4.5m (vs $1.8m in first half, but not full tax rate so bit of a guess)
NPAT = $12.5m

PE = $1.24 / ($12.5m/190.2m) = 18.9x
EV/EBITDA = ($1.24 x 190.2m - $10m net cash) / $30m = 7.5x (estimate of current net cash position)

Not demanding multiples for a growth stock, if you assume RAK can grow it's earnings from here.

2. I would be surprised if RAK gave FY12 guidance, given the volatility of the exchange rates. I don't think they have too much hedging in place for FY12 but we'll find out next week. We also know that for every 1c movement in the NZD/USD FY EBITDA is impacted by about $1.5m (company comment last year which may have changed).

My conclusion - There's too many variables for my liking to be confident about RAK's earnings, particularly around exchange rates and hedging. A NZD/USD rate of above 79c must be hurting them a bit. I'd prefer to wait until the NZD/USD starts trending down.

[Catalyst]

The FY11 result appears to be at the bottom end of expectations with EBITDA at $24.8m vs guidance of $25-30m. Not surprisingly, no guidance for the new year (other than it's started well). I suspect currency is still a major head wind.

EBITDA = $24.8m (bottom end of range)
- D&A = $12.6m (about double the half year figures)
- I&T = $ 3.7m (vs $1.8m in first half)
NPAT = $ 8.5m

Multiples look a bit stretched now...

PE = $1.24 / ($8.5m/190.2m) = 27.8x
EV/EBITDA = ($1.24 x 190.2m - $3m net cash) / $24.8m = 9.4x

[Master98]

After china factory opening, they will pour more money in before profitable, so I am sure there will be a cash issure soon. Will RAKON reborn?

[moimoi]

Is a base forming around the low to mid 80's...?

Opinions?

[Catalyst]

Is a base forming around the low to mid 80's...?

Maybe...but I can't see any evidence of anyone accumulating with any conviction. I think the market is more worried about further weakness in the USD which would obviously hurt exporters such as RAK, FPH...

[Alz99]

did anyone attend the annual meeting?

any comments?